Saudi Arabia’s New Investment Law: Empowering Global Investors

The Saudi Cabinet has approved the Investment Law, which is a key pillar of the National Investment Strategy and aligned with the Kingdom’s Vision 2030 framework. This law is expected to play a pivotal role in achieving the country’s comprehensive development goals and diversifying the national economy’s resources. Now the investment regulatory framework that contributes to private sector investment growth opportunities and a more competitive economy under the Saudi Vision 2030. The recently enacted Saudi Arabia Investment Law aims to create a more favorable and secure environment for foreign investors. The key highlights include protection of investors’ rights, facilitation of profit repatriation, encouragement of economic diversification, and support for foreign direct investment. The law’s provisions align with international standards and offer a compelling case for investors to explore new opportunities in Saudi Arabia

The new law complements the various developmental measures taken by the Kingdom. It reaffirms Saudi Arabia’s commitment to providing an attractive, supportive, and secure environment for both local and foreign investors. The approach is based on economic principles guaranteed by the rule of law, while considering established investment principles and policies, including global best practices.

The Investment Law is part of a series of regulatory and legislative reforms related to Saudi Arabia’s investment environment since the launch of Vision 2030. This includes laws on civil transactions, privatization, companies, bankruptcy, and the initiative to establish special economic zones. Over the past few years, the Kingdom has implemented more than 800 economic reforms to enhance its global competitiveness, with the National Competitiveness Center playing a leading role in collaboration with relevant government entities.

These initiatives and developments, along with various incentives, facilities, and enablers, have stimulated investors to invest in a positive, supportive, and stable investment environment. The data reflects the positive impact, with a 74% increase in gross fixed capital, reaching nearly $300 billion in 2023 compared to 2017. Foreign direct investments also increased by 61% between 2017 and 2023, reaching approximately $215 billion, and foreign direct investment inflows rose by 158% in 2023 to SAR 19.3 billion compared to 2017.

Developed by the Ministry of Investment of Saudi Arabia (MISA), the updated Investment Law follows an extensive consultation process with investors and is aligned with global best practices. It is also compatible with Gulf Cooperation Council (GCC), World Trade Organization (WTO), and other bilateral investment treaties and international obligations.

The updated investment law in Saudi Arabia is based on international best practices for investment. Here are some of the key features:

• Enhanced rights for investors: Investors will be protected by the rule of law, receive fair treatment, have their property and intellectual property rights protected, and be able to freely manage their investments and transfer funds.
• Transparency and clarity: The new law brings together all the rights and responsibilities of investors into a single, unified legal framework that aligns with international standards.
• Reduced regulatory restrictions: The process for international investors to register and operate in Saudi Arabia has been simplified, replacing the previous licensing requirements.
• Streamlined procedures and governance: There will be dedicated service centers to help investors navigate government processes and make investment easier.
• Fair competition: The law promotes a fair and competitive market environment where private companies can thrive and innovate.
• Equal treatment: Domestic and international investors will be given the same procedural treatment without discrimination.
• Effective dispute resolution: Investors will have access to high-quality dispute resolution services through the Saudi Arbitration Centre and other affiliated bodies.

These pro-investment measures are part of a broader set of reforms introduced by Saudi Arabia in recent years, including new laws on civil transactions, private sector participation, companies, bankruptcy, and special economic zones.

These initiatives, along with various incentives and enablers, have helped drive rapid investment growth in the country. Gross fixed capital formation increased by 74% from 2016 to nearly $300 billion in 2023, while foreign direct investment inflows grew by 158%, from $7.46 billion in 2017 to $19.3 billion in 2023. The total FDI balance also grew by 61% to $215 billion over the past 6 years.

The updated investment law will further enhance Saudi Arabia’s position as a leading global investment destination and stimulate economic growth. The law and its implementing regulations will come into effect in early 2025. Through this updated investment law, Saudi Arabia’s unwavering commitment to creating a thriving, globally competitive investment ecosystem that caters to the needs of investors from around the world.